POLICIES - MEANING

TYPES OF POLICIES
 Formulated policies
 It originated from the top level management
and flows to the lower level management.
 It is also known as originated policy

 These types of policies helps delegation of

authority and retain overall control.
 APPEALED POLICY

 Itis a policy formulated on the request or

appeal of lower level managers. The
subordinates may make a request for policy
to deal with an existing problem which is
not covered by the formulated policy
 IMPOSED POLICY

 Itis a policy which is imposed by some

external force like government, trade union
or trade association.
 For example, in public sector commercial
banks, recruitment and selection of
manpower are done by banking service
commission. And individual banks do not
have any control over this aspects.
 WRITTEN POLICIES
 IMPLIED POLICIES
 ORGANISING

L.A. Allen offered an holistic view on

organizing
"Organizing is the process of identifying
and grouping the work to be performed,
defining and delegating responsibility and
authority, and establishing relationships for
the purpose of enabling people to work most
effectively together in accomplishing
objectives."
 purpose of Organizing
 Provides clarity in work
 Supports plans and controls activities
 Supports decision-making
 Makes it easier to achieve the task, as they are
organized logically
 Advantages of division of labor
 Avoids duplication of efforts and resources
 Cultivates harmonious relationship among
members in diversified activities
Nature of organization
 Unity of command: To avoid conflicts and
maintain a smooth flow of authority in the
organization, each individual (subordinate)
should report to only one boss (superior).
For instance, worker A reports to
Manager I, worker B reports to Manager II
etc., and managers review their subordinates'
performance individually, i.e., Manager I
reviews the work of worker A only.
 Authority: If an organization contains a
well-defined line of authority, it becomes
easier for the employees to coordinate and
contribute their efforts, in achieving
organizational goals.
 Responsibility: Responsibility (obligation to
accomplish the work) follows, when
managers delegate the authority
 Downward delegation: A superior can get the
work done by subordinates, while retaining
authority.
 For instance, the top-level can delegate
research activity (data collection) to the
marketing department, but the authority (data
analysis, interpretation and final decision)
shall continue to rest with the top level only
 Formal organization
Definition:
 A group of people working together, under a
higher authority; with cooperation between
themselves, for achieving goals, that are of
mutual benefit to the participants and the
organization
 INFORMAL ORGANISATION

 DEFINITION:
Informal organization describes the
pattern of behavior and interaction, that stems
from personal, rather than official
relationships. In other words, informal
organizations are created by the group
members themselves, with the purpose of
accomplishing goals that may or may not be
relevant to the organization
 ADVANTAGES OF FORMAL
ORGANIZATION

 Since the definite boundary of each worker is clearly

defined, the conflict among the workers is
automatically reduced.
 Overlapping of responsibility is automatically
reduced
 More stable organization can be ensured. It makes
the organization less dependent on one man.
 A sense of security arises from classification of the
task.
 It motivates the employees.
 ADVANTAGES OF INFORMAL
ORGANIZATION

 Since informal organization gives satisfaction to the

workers, it motivates workers and also maintains the
stability of the work.
 The presence of informal organization encourages
the executives to plan the work correctly and act
accordingly.
 It is one of the useful channel of communication.
Tall Vs Flat Organizational Structure
 Advantages:

 Advantages
 Close supervision
 Close control
 Quick communication between superiors and
subordinates
 Disadvantages
 Superiors tend to get more involved in subordinate's
work
 High cost
 Excessive distance between lower and higher levels
Process of Organizing
 SPAN OF MANAGEMENT
 Meaning:

The number of people managed

effectively by a single superior in an
organization. It is also known as “Span
of supervision”, “Span of authority” and
Span of responsibility.
 DETERMINATION OF SPAN OF
MANAGEMENT

 Direct single relationship

 Direct group relationship

 Cross relationship.
 DEPARTMENTATION

 DEFINITION:

 Departmentation is the process of grouping

of activities to achieve organizational goals
and objectives and delegating the authority to
the manager to supervise the division and
guide the staff
 Departmentation is required because of the
following reasons:
 It helps an organization to gain from
specialization
 It defines the roles of each individual
 It facilitates control, coordination and
communication.
 It helps a manager to identify and locate
sources of skill, information and competence.
 Departmentation can be done in four
ways:
 Functional structure

 Divisional structure

 Hybrid structure

 Matrix structure
 FUNCTIONAL DEPARTMENTATION

 Functional structure groups are formed into

units on the basis of similarity of expertise,
skills and work-groups positions. For
instance, a production or an operation
function combines all activities that are
directly related to the manufacturing of a
product. Similarly, the marketing function
focuses on the promotion and sale of
products and services
 Advantages of functional structure
 Clarity in tasks
 Provides economies of scale within functions. As
employees are specialized, large volumes of work can be
handled effectively.
 Specialize in a particular function or an area, enables
employees to become experts in their functional areas.
 Ease of coordination within the departments, as activities
are related to similar specialized areas.
 Helps to acquire in-depth skills, for performing the job
better
 Small/medium firms can take advantage of this structure,
while producing quality goods.
 Disadvantages of functional structure

 It results in narrow, boring and monotonous tasks.

 All the decisions have to be made/passed by the top-
management. Overburdening keeps mounting (unable to
decide which one to prioritize), and this results in poor
decision making.
 Overlapping of authority, divided responsibility, and
ambiguity in accountability, not only create confusion, but
also raise conflicts amongst the departments.
 Managers who specialize in their own areas/departments,
lack knowledge of other functions, or they have a very
narrow perspective about organizational activities
 Divisional structure

 Divisionalstructure is a type of
departmentation, where in different
positions are grouped, based on the
products, services and markets. Each
division has functional resources for
pursuing its own goals, with little or no
relevance for other divisions
 Advantages of divisional structure

 Quick decisions can be made, as divisions do not

coordinate with other departments while taking decisions.
 An organization can focus on serving customers, as it has
geographic/customer departmentation.
 Results are tied to a particular product, service, territory
etc. This enables the divisions to be more responsible, for
their performance.
 Departmental or divisional managers become specialists,
as they are exposed to divisional activities
 DIS ADVANTAGE

 High costs are incurred, as duplication of activities,

takes place. For instance, each geographical
division has separate HR department, Accounts
department etc., that increases administrative and
other costs.
 Individual divisions tend to concentrate more on
individual goals rather than organizational goals.
 Divisional rivalry could occur , if the
organization's goals are ambiguous.
 Divisional structure is further classified into
product, geographic and customer divisional
Product structure
 Product structure is created,
with a purpose, to concentrate
on a particular product or
service or at least a relatively
homogeneous set of products or
services
 ADVANTAGE
 Facilitates growth and diversity, in products and
services.
 Eliminates unprofitable product lines, by drawing a
comparison among products
 It facilitates the use of specialized capital,
promotes coordination and allows the optimum
utilization of personal skills and specialized
knowledge.
 Encourages to expand the product line
without disturbing the main product.
 Provides managers with training, to improve
their managerial and inter-personal skills
 As the product manager is responsible for
each product/product and profits, it becomes
easy for the top-management to measure and
analyze the contribution of each product line
to total profit.
Disadvantages
 Selection is based on managerial
abilities only
 Managerial costs are high, as
activities relating to sales,
accounting etc. are performed by
separate departments
 Geographic division
 Inthe geographic division,
departmentation is made on the basis of
either location or territory. This structure is
very common in organizations, having
wide operations and a large network.
Examples in this area include, banking
industry, transport industry, etc
 ADVANTAGE

 Managers apply special attention to the needs

and problems of local markets
 Transportation costs are low, as salespersons
travel less, and spend more time in selling the
products.
 Improves face-to-face communication, with
managers having an opportunity to meet local
clients.
 Disadvantages

 Shortage of manpower limits organizational growth

 Geographical distance between departments, poses
communication problems
 Costs are high on account of duplication of
activities. For instance, each territory has separate
personnel, purchasing departments.
 Sometimes top managers at the headquarters, find it
difficult to control and supervise departmental
activities spread over a wide area
Customer divisions
 Customer divisions are set up, for
serving a particular type of client or
customer. They tend to serve the
niche market or the untapped
market.
 ADVANTAGES

 Addresses to the varied needs of customers,

for clearly defined services.
 Particularly useful for those organizations,
which serve different types of customers.
 For instance, the ATM facility provided by
banks, serves all types of customers –
businessmen, officers, students, agents,
salesperson etc.
 Disadvantages

 Difficult to coordinate between sales and other

departments, as customer-base
departmentation is applicable only to sales
function.
 Training that is given, may prove to be
inadequate, in understanding customers' needs.
If so, it poses a bottleneck i.e., generates only
very few brand loyal customers
 Hybrid structure
A blend of functional and divisional structures,
takes the form of a hybrid structure. Organization
adopts a hybrid structure, to avail the benefits of a
functional structure (economies of scale, in-depth
expertise, resource utilization) and a divisional
structure (focus on products, customers needs and
markets).
 IBM is an example of a hybrid structure. It adopts
the functional structure (departments), to handle
issues in areas, such as external relations and
technology; since in-depth expertise is required in
handling these areas. Divisional structure is
adopted to serve different customers' needs
 ADVANTAGES
 It provides economies of scale in key
functional areas
 It facilitates adaptability and flexibility,
in handling diverse products or service
lines.
 It helps to align both divisional and
organizational goals
DIS ADVANTAGES

The major disadvantage is

that, rivalry among the
divisions increase, as one
department tries to control
the other department.
 Matrix structure

 A matrix structure is a type of

departmentalization that superimposes a
horizontal set of divisional reporting
relationships, onto a hierarchal
functional structure. This structure
attempts to take advantage of both
divisional and functional structures
 Thisstructure enables the employees to form
themselves into different groups or teams. A
project is then assigned to each member of the
team. For instance, a company might have
developed a new product. It picks up a
representative from each functional area, to
work in the new team. This representative, also
retains the original membership of his
functional area. At any point of time, this
particular person can be a member of any one
group, and also remain as a member of original
functional area.
 Advantages

 It facilitates decentralization of decisions at

functional or divisional level.
 It monitors environmental conditions, with
respect to both the projects and the functional
areas.
 Cost effectiveness can be achieved, by
allocating resources to departments.
 Disadvantages

 Higher administrative costs due to increase in the

number of layers i.e. Project managers and their
immediate staff.
 Reporting to two different heads, results in, unclear
authority and responsibility
 Dual authority system, tends to promote conflicts.
 Due to poor interpersonal skills or absence of
control at the top-management level, changes
within the organization, take place slowly.
 Definition of Power and Authority
 Authority is the right to make decisions,
carryout actions, and direct others, in matters
related to the duties and goals of a position
 Power is the ability to marshal the human,
informational and material resources to get
things done."
 Line and Staff Relationships
 line position is vested with authority and responsibility,
for achieving the major goals of an organization. A staff
position, on the other hand, provides specialized
expertise and assistance to persons in line positions.
 In a grocery chain, store operations, pharmacy operations
and food operations (directly related to organizational
goals), may be line departments, while human resources
and consumer affairs/service are staff departments.
 Similarly, in a manufacturing organization,
production and sales are line departments, while
purchasing and accounting are staff departments
 Depending upon the nature of an organization,
line and staff relations vary. For instance, for the
aviation industry, customer service is a line
function, but, in construction industry, it
constitutes staff function.
Line Vs Staff

 The nature of line function, is advisory. It

involves planning, investigation, research,
besides giving advice to line managers. On
the other hand, staff functions are to carry out
the tasks, set by the line staff.
 For instance, HLL plans to introduce a liquid
soap in the market (line function). Before the
product launch, HLL conducts a pilot test to
find out the product's acceptability (staff
function).
Line Vs Staff
 line manager directs others
 Delegates authority to subordinates
 Trains subordinates
 Makes operating decisions
 Generalist by nature
 A staff manger assists others
 Serves on authority from his superiors
 Investigates the problems related to function
 Provides ideas to line managers
 Myopic in nature
 Limitations – Line organization

 It neglects specialists
 It overloads few key executives
 It requires a high type of supervisory personnel to
meet the challenges imposed in the absence of
specialists as advisors
 It is limited to very small organization
 It encourages directorial way of working which may
not develop own creative thinking of workers.
 Limitation – Staff organization

 Danger of undermining line authority

 Lack of staff responsibility

 Thinking in vacuum.

 Managerial problems.`
 Centralization Vs Decentralization
 Centralizationimplies a systematic and
consistent reservation of authority at the
central points within an organization. On
the other hand, decentralization is granting
of decision-making authority by top level
management to the lower level employees.
 Delegation of Authority
 Delegation of authority is the delivery by one
individual to another, of the right to act, to make
decisions, requisition resources and to perform
other tasks in order to fulfill job responsibility."
Delegation is the establishment of a pattern of
authority between superior and one or more
subordinates
 IMPORTANCE OF DELEGATION
Itrelieves the manager from his heavy workload by
means of dividing the work and share the
responsibility with his subordinates.
It leads to better and quick decision in the organization
because the authority has been distributed to so
many people and each person who has been
delegated the authority is capable enough to take the
decision himself.
It enables the manager to obtain the 8758+ knowledge
and expertise of subordinates.
It helps to improve job satisfaction, motivation and
morale of subordinates.
 PROCESS OF DELEGATION

 Determination of results expected

 Assignment of duties

 Delegation of authority

 Creation of obligation or Accountability.

Staffing

 Activitiesthat are aimed at

attracting and selecting individuals
for different positions that facilitate
the achievement of organizational
goals. This process involves
recruitment and selection
RECRUITMENT

 Recruitment is the process, of attracting

suitable candidates, who are capable of
effectively filling the existing job
vacancies
 SELECTION PROCESS

 The selection process involves, choosin

the right candidate, and matching his
characteristics ( knowledge, skills,
experience etc.), with the requirements
the job.
 The following seven steps are involved
the selection process.
 Preliminary screening: Based on the job
description and job specification, certain
candidates can be eliminated through initial
screening process.
 For instance, rejection of all those applicants,
whose aggregate marks (graduation) are below
65%.
 Application blank: After preliminary screening,
candidates fill a formal application, which is
designed to obtain information about the
candidate. These applications are used for
deciding, whether a candidate merits any
further evaluation or not.
 Selection tests: To test the knowledge, skills etc. of
the candidates, organizations conduct intelligence
tests, personality tests, knowledge tests and
performance tests.
 Comprehensive interviews: In-depth interviews
are conducted to gather detailed information about
the candidates. Unlike the initial screening
interview, the comprehensive interview is
conducted by the manager himself, to whom the
candidate is likely to report after selection.
 Reference checks: Verifying the information
given on application blanks, and assuring that the
information given by the applicant is correct, by
conducting reference checks. References can be
either a former employee/manager, professors
and relatives, who can give a right opinion about
the suitability of the candidate.
 Physical examination: Designed to ensure that
the candidate can perform effectively in the
position for which he has applied
 TECHNIQUES FOR
DESIGNING JOBS
 Job Enlargement
 Job Rotation

 Job Enrichment
 HUMAN RESOURCE
DEVELOPMENT
 Meaning:
 It is the process of improving, molding and changing
the skills, knowledge, creative ability, aptitude,
altitude, values, commitment etc. based on present
and future job and organizational requirements.
This function include,
 Performance appraisal

 Training

 Management Development
 PERFORMANCE APPRAISAL

 Itis the systematic evaluation of individuals

with respect to their performance on the job
and their potential for development. It includes
 Developing policies, procedures and
techniques
 Helping the functional managers

 Reviewing and consolidation of reports

 Evaluating the effectiveness of various

programme.
 TRAINING
 It is the process of imparting to the employees
the technical and operating skills and
knowledge. It includes,
 Identification of training needs of the
individuals and the company
 Developing suitable training programmes

 Helping and advising line management in the

conduct of training programmes
Evaluation of the effectiveness of training
programmes.
 MANAGEMENT
DEVELOPMENT
 It is the process of designing and conducting
suitable development programmes so as to develop
managerial and human relation skills of employees.
It includes,
 Identification of the areas
 Conducting development programmes.
 Motivating the executives
 Designing special development programmes for
promotions. Evaluating the effectiveness of
executive development programmes.
 MANAGERIAL
EFFECTIVENESS